DUBAI, Nov 23 (Reuters) - Saudi Arabia will ease requirements for foreign institutional investors in its stock market, the securities regulator said on Thursday, as Riyadh seeks to draw more capital into the market before the listing of state oil giant Saudi Aramco.

The Capital Market Authority opened the bourse to direct investment by qualified foreign institutions in 2015. It reduced minimum requirements for the institutions last year and is now proposing a fresh round of reforms, giving the public 14 days to comment on the proposals.

Among the reforms, the minimum value of assets under management needed for an institution to qualify as an investor would fall to 1.875 billion riyals ($500 million) from 3.75 billion riyals.

Red tape in the qualification process would be simplified, while institutions could qualify subsidiaries and managed funds without submitting a separate application for each of them.

The CMA said it would also recognise a wider range of other regulatory jurisdictions as acceptable to Saudi Arabia.

All types of foreign investors combined, including those investing indirectly through swaps, still own only about 4 percent of the Saudi stock market, which has a capitalisation of about $436 billion.

But economic reforms, designed to diversify the kingdom beyond oil exports, are boosting foreign interest. Saudi Arabia now has over 100 qualified foreign institutional investors, CMA chairman Mohammed El Kuwaiz said last month; more than 20 percent of them had registered in the previous 30 days.

The number of foreign funds operating in Saudi Arabia could affect the government’s plan to sell about 5 percent of Aramco next year, potentially raising some $100 billion, according to authorities’ valuation of the company. It could be the world’s largest-ever initial public offer of equity.

Some Aramco shares will be listed in Riyadh, but officials are considering a multiple listing that includes one or more foreign markets, such as New York, London, Hong Kong and Tokyo.

Last month, however, Saudi Stock Exchange Chief Executive Khalid al-Hussan said his market hoped to be the exclusive venue for listing Aramco shares and could absorb all of them. A bigger presence for foreign institutional investors in Riyadh might make that possible by adding to demand.

The plan to ease requirements for foreign investors is part of a string of steps in the past two years to modernise the Saudi market. On Wednesday, the CMA released rules allowing investors to file class-action suits, which could speed the resolution of disputes in the market. (Reporting by Andrew Torchia, editing by Larry King)